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Editor's note: As part of our partnership with PBS's Nightly Business Report, TheStreet's Bryan Ashenberg joined NBR Tuesday (watch video and read transcript here) to discuss stocks with breakout potential.

As earnings season has come to a close, we are taking this opportunity to highlight three of our Breakout Stocks model portfolio holdings. These names represent small- and mid-cap stocks that are in various stages of their stock lifecycles. One company boasts a successful turnaround story and plenty of room for further growth. The second is a company in the midst of righting the ship, and the third is in the earlier stages of a turnaround.

First up is

Kansas City Southern

(KSU) - Get Free Report

. The company operates rail-freight transportation services in the U.S., Mexico and Panama. We are convinced that the company is capable of lowering its costs while capitalizing on emerging growth opportunities, including a revitalized Mexican rail business. In addition, its improving balance sheet may even be able to support a dividend beginning in 2012.

Management has commented that Mexico is "the new China," and Kansas City Southern is the sole rail operator out of the growing Port of Lazaro Cardenas. According to management, labor rates between China and Mexico have been converging, with recent labor rates in China only 15% below those in Mexico.

Shipping costs are significantly higher out of China, leading many manufacturers toward the trend of "near sourcing" and resulting in a shift of production to Mexico. While its Lazaro business still accounts for a smaller part of the company's revenue, we are pleased to see new engines of growth to power this rail company forward.


RSC Holdings

(RRR) - Get Free Report

is the second largest equipment rental company in North America and is primed to benefit from a resurgence in the rental market for heavy equipment.

Heavily weighted to the industrial/non-construction market, RSC is beginning to see improvement in its key growth catalysts, which are rental volumes and rates, higher utilization of its equipment, and an increase in used equipment prices. Rental rates saw their first positive year-over-year quarterly comparisons over the past three years in the recently reported first quarter. We continue to believe that the stock will narrow its valuation gap relative to its historical norms as demand from its end-markets picks up.

The last name is

California Pizza Kitchen

( CPKI), a premium-casual restaurant chain that is a leader in the retail premium pizza category as well as the frozen grocery marketplace.

Management has been executing on its plan to control costs in 2011, while leveraging and enhancing its brand and building sustainable traffic. Recent menu changes have ousted lower-selling items in favor of higher-margin offerings. The focus is less on near-term growth, and more on righting the company before it starts to power up the growth engines.

The company's recent results have been encouraging. Separately, as of April 2010, the board of directors authorized management to consider strategic alternatives, including the sale of the company. The two co-founders of the company are older than 65, and between them, they own 16% of the shares. A possible sale is never a good enough reason to own a stock, and this case is no different. However, we would be pleased if we were lucky enough to still own the stock should a premium offer be made for the shares. The stock's discounted valuation makes for an interesting risk-reward scenario.

In keeping with TSC's editorial policy, Bryan Ashenberg doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback;

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